NextDC puts community backing first as M3 delay strains expansion

Jemena had formally told NextDC it did not expect to resume those works before February 2027. On Jemena's indicative estimate, NextDC expected the next increase in grid supply during FY28, with delivery and billing of the dependent capacity shortly afterwards. Later power increases require new transformers at Brooklyn Terminal Station; delays there affect capacity expected to begin billing after FY28.

The planning decision for M3 stages 6 and 7 is another dependency. NextDC's October announcement said it no longer expected a Victorian government decision until 2027, following the November 28 state election. Approval itself remains an assumption in the company's delivery timetable.

Company-reported liquidity components at September 30, 2026. Debt drawdowns depend on covenants and expected billing; hybrid funding is subject to customary conditions. Figures are unaudited and unreviewed. Source: NEXTDC announcement via Webdisclosure.

The financial risk extends beyond deferred revenue

For the year ending June 30, 2027, NextDC revised its forecasts as follows in the October announcement. Net revenue means total revenue less direct costs; underlying EBITDA is its adjusted earnings measure before interest, tax, depreciation and amortisation. Both sets of guidance use constant exchange rates.

These are forecasts, not results. The revised ranges exclude the affected M3 customer contracts, including capacity already billing and potential service credits. The August forecasts had included approximately A$140 million of both net revenue and underlying EBITDA from those contracts. Existing power could not reliably support the full contracted increase even in halls already delivered, NextDC said.

The contracts remain in place subject to customer rights. They provide service credits for late or insufficiently powered capacity and, in some circumstances, termination rights. NextDC was assessing potential relief under force majeure and other provisions. Actual FY27 results will include the affected contracts' contribution; service credits could push underlying EBITDA below the revised range. The company also expected an unquantified effect on investment-property values in its December half-year results. Its guidance excludes those fair-value movements.

Spending comparisons need an accounting adjustment. Revised FY27 capital expenditure guidance of A$4.5 billion–A$5 billion includes about A$230 million of capitalised interest, which the previous A$5.25 billion–A$5.75 billion range excluded. Removing that interest, NextDC put the comparable reduction at approximately A$980 million, or 17%–19%. Remaining spending focuses on contracted capacity due within 12–18 months or developments close to completion.

NextDC reported A$8.675 billion of liquidity at September 30, but only A$1.275 billion was cash. The balance comprised A$6.7 billion of undrawn senior debt facilities and A$700 million of committed hybrid securities available for delayed draw, subject to conditions. The liquidity figure was unaudited and unreviewed.

The company said it complied with financial covenants at the June 30 test and expected to comply at December 31. Its earliest scheduled debt maturity is December 2029, with a convertible-note holder redemption option in September 2029. Yet its ability to draw all the senior facilities depends on expected billing: the interest-cover covenant allows annualised EBITDA from new contracts expected to start billing within 24 months. A material change in those expectations, including M3 delays, could constrain borrowing. The liquidity total therefore does not establish that all funding is immediately accessible.

Rivals acquire a stake, with no takeover commitment

The conference report put the investment by data centre rivals Goodman Group and its New York-listed partner Digital Realty at A$715 million for a 9.9% interest. They bought the stake after NextDC's shares fell 42% following the October forecast cut; the report said the shares subsequently recovered the lost ground.

The buyers said they had no current takeover plans, while reserving the right to make an offer, and expressed interest in possible collaboration with NextDC's board and management. Their stake gives competing operators a financial interest in the outcome. It does not establish a takeover agreement or a solution to the power delays.

November 20 is the next test of the spending plan

NextDC has committed to announce its capital expenditure review by its November 20 annual general meeting, where it also promised further updates. The next questions are which projects remain funded or deferred, and whether the board pursues development-site sales.

For M3, the key tests are consent to restart Jemena's works, a credible staged electricity timetable, a planning decision and the outcome of customer discussions on power delivery and contractual consequences. Those outcomes will determine how much contracted capacity can become billable revenue, and on what terms.

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